European Central Bank: Growth of stablecoins will weaken banks' lending capacity and the effectiveness of monetary policy transmission

CycleProphet · 2026-03-03T11:47:25+00:00

The European Central Bank published a paper stating that the growth in stablecoin usage is eroding bank deposits and weakening the effectiveness of monetary policy on loans. The study points out that the rise of stablecoins is related to declines in deposits and corporate loans, which could lead banks to rely on more expensive financing methods. The impact of stablecoins on monetary policy depends on their scale, design, and regulation.

CycleProphet

2026-03-03 11:47:25

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Deep Tide TechFlow News, on March 3rd, according to Cointelegraph, the European Central Bank released a new working paper showing that the growth in stablecoin usage is drawing funds away from bank deposits, weakening the transmission of monetary policy to loans.

The research indicates that rising interest in stablecoins is associated with a significant decline in retail bank deposits and a reduction in corporate loans. When deposits decrease, banks may be forced to rely more on wholesale or market financing, which is usually more expensive and less stable. The European Central Bank noted that the extent to which stablecoins interfere with the transmission channels of monetary policy depends on their scale, design features, and regulatory approach. In particular, stablecoins denominated in foreign currencies may further weaken the link between domestic monetary policy and bank loans.

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